Reliance Communications’ market cap plummetted to around ₹2,900 crore as the stock crashed by 15 per cent to touch a low of ₹9.95 on Wednesday as bankruptcy proceedings were allowed against the company.
The National Company Law Tribunal (NCLT) has admitted three insolvency petitions filed against RCom and its subsidiaries by telecom gear maker Ericsson to recover ₹1,150 crore in dues.
RCom now cannot sell any of its assets till the case is heard, jeopardising the bailout deal with Mukesh Ambani’s Reliance Jio.
The comnpany’s share price had risen three-fold from a low of around ₹10 this year after it was reported that RJio would buy RCom.
Under the deal, RJio was to acquire RCom’s mobile network and fixed-line assets.
But the bankruptcy proceedings do not leave RCom with any option.
RCom was once the darling of the stock markets, as it commanded an equity capitalisation of more than ₹1.25 lakh crore.
Its share price hit an all-time high of ₹794 at the peak of the stock market boom in 2008, just days ahead of the historic crash.
RCom’s key promoter Anil Ambani was on the Forbes richest list with a net worth of more than $45 billion.
In fact, few believed a stinging report from Canadian research firm Veritas in 2012.
Early warning
That report had said that RCom deserved to be a penny stock: the company was then valued at around ₹25,000 crore in the equity markets.
Since then, RCom has been struggling to make ends meet. Its debt has doubled to more than ₹45,000 crore from around ₹20,000 crore in 2009.
After much manoeuvring, and several failed attempts to sell its telecom towers, the company’s last-ditch effort was to sell all its assets to RJio.
“RCom and two of its subsidiaries — Reliance Telecom and Reliance Infratel — await the detailed orders of the NCLT allowing the Ericsson application for admitting the companies to debt resolution under IBC,” an RCom statement said.
“The companies will decide the next course of action after studying the orders,” the statement added.
For RJio, though, the delay in acquiring RCom assets means little, as it has already rolled out an extensive network of its own.
Analysts said RJio could acquire RCom’s assets much cheaper if the NCLT gives the green signal for initiating insolvency proceedings.